What is Nidhi Company?
Nidhi Company is the kind of the NBFC Company which is recognized under section 406 of the Companies Act, 2013. Unlike the NBFC (Non- Banking Financial Companies), A Nidhi Company does not require the license from Reserve Bank of India. It has been incorporated for the mutual benefits of its members in which they take deposits from their members and lend it to their members only. As a result, the fund rests in the company itself and is used among the members and shareholders of the company.
Why choose Nidhi Company Registration in India?
Helpful for the people of lower and middle class.
No external involvement in management.
There is a minimum requirement of document for the registration procedure of a Nidhi Company.
The investment is secured, and there is a low rate of interest.
What are the Benefits of having Nidhi Company Registration in India?
No minimum share required.
Nidhi Companies get easily funded from its group members, and at the same time, lending is also easy.
There is a smooth transfer of ownership.
There is a lower rate of interest in the Nidhi Companies and investment is also secured.
There is an exemption under the Companies Act, 2013
Registration Requirements of a Nidhi Company -
Pre-Registrations Requirements of a Nidhi Company :
A minimum number of members required is 7.
Minimum number of Directors required is 3.
No minimum capital requirement.
If the company has issued the preference share before the incorporation procedure, then those shares must get redeemed as per the terms of the issue.
The minimum authorised capital required is INR 5 Lakhs.
The Companies incorporating with the perspective of Nidhi objectives must have their last name as “Nidhi Limited”.
What are the Post-Registration Requirements of a Nidhi Company?
A minimum of 200 members is required in the company within 12 months of registration. It has to maintain the requirement of 200 members during the course of time. If anytime thereafter the strength falls below 200, the company will be a default. In case if the company is unable to reach the limit of 200 members, then the company must apply for the time within 30 days of closure of the financial year in form NDH-2 with regional directors, Ministry of corporate affairs.
A minimum net owned fund(NOF) of 10 lakh or more than that.
There should be at least 10% of the outstanding deposits.
The company must not make body corporate, trust, or minor as a member.
The ratio of Net Owned Funds to deposits should be 1:20.
For example – If you have a net owned fund of 10 lakh, then your total deposit limit should be two crores.
Documents required for the incorporation of a Nidhi Company Registration
For the Members and Shareholders
· Id Proof such as PAN Card
· Passport size photograph
· Bank statements and utility bills such as and telephone electricity bills.
Proof of the Registered office
· A Copy of the Rent Agreement (in case the office is rented).
· A copy of utility bills (electricity, water, telephone bill) of registered office.
· NOC from the landlord.
Procedure for Nidhi Company Registration
Obtaining DIN (Director Identification Number)and DSC (Digital Signature Certificates) -The applicant must get the Director Identification Number(DIN) and the Digital Signature Certificates(DSC) of all the companies.
File Form SPICe32
After the name approval, File form SPICe32 which can help the company with a single application for the reservation of name. Following documents must be attached with the SPICe Form -
o Memorandum Of Association (MOA).
o Articles of Association (AOA).
o PAN Card and Identity proof of the subscriber.
o Address Proof of the Directors.
o Address proof of Registered Office(Rent Agreement)
o Latest utility bills of the Registered Office like Electricity or water bills)
o NOC from the owner of the premises.
o Self Declaration from first directors and first Subscriber in (Form INC-9).
Incorporation Certificate approval
It usually takes 15 to 20 days to get the incorporation certificate of Nidhi Company after all the documents have been filed and registration fee and stamp duty is paid.
Areas in which Nidhi Companies cannot engage
Nidhi Company cannot enter into the business of chit funds, insurance, and hire purchase.
Lending or accepting funds to/from outside the companies as the funds remain inside the company.
These companies cannot pay any brokerage or incentives for deploying deposits from members.
Conclusion
Nidhi Company Registration is a Mutual Benefit Company because it promotes the habits of saving and utilising the funds in the future amidst its members. These companies are most popular in South India. And about 80% of the Nidhi Companies are located in Tamil Nadu.